Question Period Note: Closures in Northern Ontario’s industrial sector

Ongoing and looming industrial closures threaten jobs, communities, and the forestry and steel sectors in Northern Ontario.

• Industrial closures in Northern Ontario create economic uncertainty for communities, residents, and businesses, especially in small, rural or remote communities.
• The forestry and steel sectors are especially vulnerable to global trade disruptions.
• FedNor is concerned about recent and potential closures, including the recent challenges at Kap Paper and the layoffs at Algoma Steel in Sault Ste. Marie.
• FedNor continues to engage with municipal leaders, provincial counterparts, and industry stakeholders to identify practical steps to help.
• Through the Northern Ontario Development Program, FedNor supports diversification, downtown revitalization, and investment readiness that can help communities adapt.

On December 1, Algoma Steel in Sault Ste. Marie issued 1,000 layoff notices as part of its accelerated transition from integrated steelmaking to Electric Arc Furnace operations. This shift entails the decommissioning of blast furnace and coke making facilities. While workforce reductions had been anticipated, tariff pressures have advanced the timeline by one year, with the layoffs scheduled to take effect in March 2026.
Algoma Steel received $400 million in financial assistance from the federal Large Enterprise Tariff Loan Program, and $100 in provincial support in September.
Algoma Steel employs approximately 2500 employees and is one of the largest employers in Sault Ste. Marie. Community leaders stress that the layoffs will cause economic ripple effects throughout Northern Ontario with impacts to small businesses and municipal revenues.
In October, FedNor announced $12 million in funding through NODP and REGI to support the continued operation and modernization of the Kap Paper mill after it announced that it would have to idle its operations without additional support from the federal and provincial governments. At the same time, the province provided an additional $16.8 million in funding.
Kap Paper Inc. (Kapuskasing, pop. 8,000) is the town’s largest employer, providing over 300 direct jobs and supporting an estimated 2,500 indirect jobs across the regional forestry sector. The jobs are long-term, skilled positions in a region with limited alternative industries.
Kap Paper CEO Terry Skiffington appeared before the Standing Committee on Natural Resources in November and indicated that the company is no longer economically viable and needs to pivot its operations from pulp and paper to engineered wood products. Kap Paper is working to obtain funding from the Strategic Response Fund through Innovation, Science and Economic Development Canada to support this transition.
Kap Paper is the last operating pulp and paper mill in Northeastern Ontario, following Domtar’s Espanola closure in 2023 and Terrace Bay’s idling in early 2024. This underscores the fragility of the sector.
Additional closures include:
• In late 2023, Domtar’s decision to idle the Espanola pulp and paper mill affected approximately 450 employees. Two years later, the site was purchased with plans to transform it into a hub for clean energy and bioeconomy innovation, offering renewed hope for the community’s economic future.
• The Terrace Bay Pulp Mill has been idle since 2024 due to prevailing market conditions. The Mill is the community’s largest employer, and the decision is reported to involve the direct layoff 400 people.
• On October 17, 2025, the Interfor mill in Ear Falls announced an indefinite shutdown of the sawmill. The shutdown, attributed to impacts of US tariffs, will impact 150 jobs in the community.

• FedNor plays a key role in convening federal and provincial partners to help companies access funding for strategic projects.
• FedNor provided $10 million in funding to help Kap Paper maintain operations, and an additional $2 million to advance the business planning, engineering, and development work needed to modernize and access new markets.